If mortgage rates fall by one percentage point, homeowners could see double-digit property price inflation.
That’s according to analysis from Go.Compare, which has used current Office for National Statistics data and an APR of 5.3 per cent to make its house price predictions.
The price comparison site said that, if mortgage rates stay at their current rate, house prices could increase by 5.92 per cent by September 2024.
But, if mortgage rates move up or down, homeowners could be looking at either a dramatic increase or fall in the value of their property.
Impact of rate changes
Go.Compare Home Insurance has calculated that a one percentage point increase in average rates, to 6.3 per cent, would mean a 4.66 per cent fall in house prices by next September.
However if mortgage rates fall by one percentage point, to 4.3 per cent, homeowners could see a significant 10.5 per cent added to their house price.
This would boost the average house price from £291,385 at the beginning of September 2023 to £321,968 a year later – a rise of over £30,500.
If interest rates fall by one percentage point, mortgage repayments would also become cheaper. The monthly repayments on the average house price next autumn would total £1,753 per month, compared to £1,859 if rates stay the same.
Ceri McMillan, home insurance expert at Go.Compare, said: “With so much disruption in the housing market, homeowners are facing uncertainty over housing costs.
“Many are wondering how interest rates will affect the value of their homes as well as their monthly repayments, as many have seen a jump in their outgoings.
“Our data shows that as mortgage rates rise and fall, this correlates to the completion value of homes. If mortgage rates continue to increase, homeowners may see lower completion prices.”